Using loans for deposits

_Andy_

If you declare the source of a deposit to be anything other than what is actually is (which you'll need to do to both the lender and solicitor) then it's fraud.

cashorcheque

But if the source of the deposit is our parents and then we pay them back with a loan, is that still fraud?

_Andy_

Technically not I would imagine.The lender may require a letter from your parents stating they don't want an interest in the property etc.

ritz55

What I did recently myself was exchange contracts and set a completion date of 3 weeks from Exchange, I had a large credit limit on my credit cards with no debt so did some balance transfers followed by a super balance transfer to get the money into my bank account. Time it right so you borrow the money just after the statement. Since the credit limit is already there no need for a credit check. Takes the credit card company a number of weeks to update the credit reference agency so therefore goes undetected. No fraud as borrowed the money honestly from the credit card company afterwards. Reason if asked by mortgage lender would be for refurbishing the house, which in my case is actually true as the property is little run down.

cashorcheque

Okay, so I think we will proceed with the mortgage application. If we get an acceptable offer on our house then we'll know how much we might need for a loan, so we can apply for that after our mortgage application has already gone through. Then our parents can put the money into our account and, on the same day and from a different account we can swap our money into theirs to pay them back.

Hhhmmmm.... weighing up how comfortable I am to do this...

dander

I really think your first step needs to be to go to a good mortgage broker and explain every detail of your situation. You may find that with a bit of expert advice there are products out there that will actually suit your situation better than trying to figure out solutions yourself. You're not the only people out there these days trying to move with negative equity, so they will have experience with things like this.

cashorcheque

I think you're right. The trouble is we have quite high ERCs (3% of what we owe) unless we stay with our current lender, but it is definitely worth seeing what else we can do because it may well be worth paying them to get a better solution.

Thanks.

Fire_Fox

DO NOT lie on a loan application and DO NOT lie on a mortgage application it is fraud. If your parents are lending you the money temporarily your lender will want to know, they usually only accept saved or gifted deposits. You clearly cannot afford to purchase another house at this point in your life, if something goes wrong (redundancy, unexpected pregnancy, illness or injury) you will not be able to pay your mortgage and you will not be able to pay your loan as you have no savings.

If you focus your minds for six months or a year I bet you can get yourselves out of the current situation - read around the Debt-free Wannabe and Mortgage-free Wannabe boards to see how to cut your outgoings to the bone. Consider taking a lodger into your existing home or a second job to bring in more money.

Thrugelmir

Why not simplify the whole transaction and sell up. Move into rented for a period of time. Then get your finances sorted out.

Whilst your ideas are extremely creative. Any number of things could happen which would only create far more serious issues.

MORPH3US

cashorcheque wrote: »

Then our parents can put the money into our account and, on the same day and from a different account we can swap our money into theirs to pay them back.

Doing it on the same day would definately make it look fraudulent IMHO.

Can they not transfer it over just before you buy the house and then wait until you have been in for a couple of months before you transfer it back?

I understand they may not want / be able to do that but doing it on the same day just looks dishonest.